Gold prices in Pakistan dropped sharply on Monday, tracking losses in the international market as investors reacted to fresh geopolitical tensions in the Middle East and changing expectations for US interest rates.
According to the All Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold fell by Rs3,800 per tola, bringing the new rate down to Rs429,736.
The price of 10 grams of gold also moved lower, declining by Rs3,258 to settle at Rs368,429.
The decline came after the local market ended the previous trading session on a stronger note. On Saturday, gold had gained Rs1,100 per tola, taking the price to Rs433,536 before Monday’s reversal erased those gains.
The weakness in Pakistan’s bullion market mirrored the international trend, where gold prices extended their losses for a second straight session.
In the global market, gold fell by $38 per ounce, with the international rate settling at $4,073 per ounce, including a premium of $20.
Spot gold was trading around $4,072 per ounce during international trading, while US gold futures for August delivery also remained under pressure.
Analysts said investors shifted their attention to the economic impact of the escalating conflict between the United States and Iran. The exchange of missile and drone attacks has fuelled fears of higher energy prices after Tehran hinted at the possible closure of the Strait of Hormuz, a key global oil shipping route.
The latest developments pushed oil prices up by nearly 3 percent, raising concerns that higher energy costs could keep inflation elevated.
Market analysts believe that persistent inflation may encourage the US Federal Reserve to maintain higher interest rates for longer. Since gold does not offer interest income, rising borrowing costs tend to reduce its appeal compared with interest bearing investments.
Ole Hansen, an analyst at Saxo Bank, said renewed tensions in the Gulf, combined with rising oil prices and a stronger US dollar, are creating fresh pressure on gold prices. He added that thin summer trading volumes could lead to larger price swings in the weeks ahead.
Investors are also closely watching a busy week of US economic data, including inflation reports, retail sales and weekly jobless claims. Markets are looking for signals that could shape the Federal Reserve’s next policy decision.
Meanwhile, silver prices also moved lower in Pakistan. The price of silver dropped by Rs123 per tola to Rs6,339, reflecting the broader weakness across precious metals as international sentiment remained cautious.
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